House approves split of settlement money from BP oil spill

April 29, 2016

KIM CHANDLER | Associated Press

MONTGOMERY, Ala. (AP) — The Alabama House of Representatives on Thursday approved a compromise plan for doling out settlement money from the 2010 BP oil spill — one that could help stave off cuts in Medicaid this fall.

The House-passed bill was a last-minute deal between lawmakers who said the wisest thing to do with the $1 billion settlement was to pay off state debts and lawmakers from coastal counties who argued more money should go to areas that took the brunt of the damage from largest oil spill in US history.

Representatives voted 82-12 for the legislation that would use settlement money — after getting it through an upfront payment — for both debt repayment and coastal road projects. It has two days to get through the Alabama Senate, where senators have expressed different ideas about how to use the money. A Senate-passed plan would have steered money to road projects across the state.

“I think it’s going to come down to senators now over the weekend. Where they had decorated it up as a Christmas tree to begin with, spreading money all around. Now, this bill takes care of 80 percent of the money that we owe,” House Ways and Means Chairman Steve Clouse, R-Ozark, said.

Clouse said paying debts off early would provide $70 million of the $85 million Medicaid officials have said they need to avoid service cuts next fiscal year.

“I think they will be hearing from (medical) providers over the weekend concerned about Medicaid. If they don’t go along with this bill, that $70 million won’t be available,” Clouse said of state senators.

Earlier this month, Gov. Robert Bentley and Medicaid Commissioner Stephanie Azar laid out potential Medicaid cuts without additional funds, including harsh options such as eliminating prescription drug coverage for adults or requiring patients to go to one big-box pharmacy chain through a preferred provider program.

The U.S. Justice Department and five states last year announced a $20 billion final settlement of environmental damage claims arising from the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. Alabama’s general fund was to get $1 billion paid in yearly installments over the next 18 years. The state would also get $1.3 billion over the next 15 years for coastal restoration.

The House-passed bill seeks to get the $1 billion general fund money up front by doing a bond issue secured by the yearly payments.

The Alabama general fund would get an estimated $639 million up front, under the plan, Clouse said. The state would use $450 million to repay money borrowed from other state funds in previous years to avoid budget shortfalls. It would also provide $191 million for road projects in Mobile and Baldwin counties.

House Speaker Mike Hubbard said he expected the bill to end up in conference committee, but anticipated House members would stay firm about using the money to pay debts.

“I think it would be a real tragedy if we didn’t pass something that would allow us to turn that money into cash that we can use to pay down on our debt,” Hubbard said.

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